What is the formula for calculating gratuity in India?

Under the Payment of Gratuity Act, 1972, gratuity is calculated as: Gratuity = (15 × Last Drawn Basic Salary × Completed Years of Service) ÷ 26.

What is the tax exemption limit on gratuity in India?

Under Section 10(10) of the Income Tax Act, gratuity received by private-sector employees is exempt from income tax up to a maximum statutory limit of ₹20,00,000 (₹20 Lakhs). Any amount received above ₹20 Lakhs is added to taxable income.

Payment of Gratuity Act, 1972

Gratuity Calculator (India)

Calculate your statutory gratuity payout and Section 10(10) tax-free limit based on completed service tenure and last drawn basic salary.

Service & Salary Details

Last Drawn Monthly Basic + DA (₹)₹75,000

Completed Years of Service8 Years

Eligible for statutory gratuity payout.

Statutory Formula:(15 × Last Drawn Basic Salary × Years of Service) ÷ 26

26 represents working days in a month (excluding 4 Sundays). 15 represents half a month's wages for each year of service.

Total Gratuity Payable

₹3,46,154

Tax-Free under Sec 10(10)₹3,46,154Max ₹20L exemption

Taxable Portion₹0Taxed at slab rate

Calculation Verification:

(15 × ₹75,000 × 8) ÷ 26 = ₹3,46,154

Invest Your Gratuity

Deploy Your Gratuity Lump Sum in Mutual Funds

Calculate the future value of investing your tax-free gratuity lump sum.

Lumpsum Calculator

Statutory Notice: This calculator applies to organizations with 10 or more employees covered under the Payment of Gratuity Act, 1972. Service over 6 months in the final year of employment is rounded up to 1 full year under statutory case law.